Medicaid a Bright Spot in a Dismal Economy

By Abuko Estrada, Healthcare Staff Attorney at the New Mexico Center on Law and Poverty.

Since 2008, it has been gloomy in New Mexico. Our state is still recovering from the Great Recession. Our job growth has been among the worst in the nation, leaving us well short of pre-recession job levels. We are the only state in the nation where more people are moving out than moving in.

Our economic forecast still looks dismal.

There has, however, been one ray of sunshine–our healthcare sector is growing and over two hundred thousand New Mexicans have financial relief due to Medicaid expansion.

Now that we finally see a bright spot, let’s not ruin a good thing.

When New Mexico expanded Medicaid in 2014, our state had many reasons to celebrate. Polls showed overwhelming public support for Medicaid, with most voters in favor of Medicaid expansion and opposed to making cuts to the program.

The skyrocketing uninsured rate was taking its toll, leaving people without treatment or forcing families into medical debt and even bankruptcy. Medicaid expansion has meant that over 220,000 more New Mexican adults have health care coverage. This expansion of adult coverage also helped capture more uninsured children, reducing that rate by almost 16 percent during the first year alone.

New Mexicans knew that Medicaid expansion would boost job growth. In fact, the health care industry is driving job growth for our state. According to the Legislative Council Service, health care jobs have accounted for 56 percent of the new jobs over the last year.

We knew that Medicaid expansion would reduce costs for hospitals and healthcare providers, allowing them to invest in new facilities and their workforce. New Mexico’s 28 hospitals have already seen a 30 percent drop in the uncompensated care of uninsured patients from 2014. Our federally-qualified health centers, which have generally operated under budget deficits due to uncompensated care, had net income of $1.8 million dollars in fiscal year 2014. According to the New Mexico Primary Care Association, the better financial picture will allow the health centers to raise provider pay and increase capacity around the state.

We knew that Medicaid expansion would lead to economic relief for our families. In the past, people were routinely sent to collections for medical bills they could not pay. Healthcare coverage through Medicaid gives families more disposable income and the ability to build assets rather than struggle with debt. Every taxpayer also paid for state and county funds for hospitals to treat uninsured patients.

Finally, we knew that Medicaid expansion would be good for state revenue by injecting over $1 billion non-state dollars into the economy each year, primarily into the private sector, and increasing insurance taxes. In fiscal year 2014, The Department of Finance and Administration says New Mexico collected $115 million in insurance taxes. Economists with the Legislative Finance Committee estimate that number will grow to $247 million dollars by 2020.

For the first three years of expansion, we got all of these benefits at no cost to the state. In 2017, we will only pay 5 cents on the dollar, while the federal government takes on 95 percent of costs. After 2020, we will pay no more than one dime for every dollar to maintain these benefits. The insurance tax on Medicaid managed care companies retrieves 4 of these cents – canceling out nearly all of the State’s costs in upcoming years.

Still, some policymakers question the value of expansion and would like to cut support for the program.

It would be wrong to reverse course now and dump one of New Mexico’s best investments. Our state could lose hundreds of millions, if not billions, of dollars in economic activity.

Every dollar lost would damage our health care industry and workforce, stunting the driving sector for our job growth. Halting this growth could prove disastrous for our rural areas, which already face provider shortages. It would become more difficult to attract providers and build capacity.

New Mexico can only move forward if we capitalize on what we have. When the weather is finally breaking, let’s not take it for granted. By making the right choice to fully fund and support Medicaid, we can invest in a brighter future.